DIGITAL INTERACTIVE SERVICES
Which metrics matter most when evaluating marketing campaign performance?
Marketing agencies operating in the digital space came to take the moniker of digital marketing agencies. With the passage of time and higher measurability of the digital medium, marketing agencies are today all about elevating performance using multiple channels - both traditional and digital media. Hence the latest and trending, Performance Marketing agencies.
What are performance marketing metrics?
Performance marketing metrics, also called advertising performance metrics, are the measurements used to judge how well a paid campaign turns ad spend into results, from how often an ad is seen and clicked to how many conversions and how much revenue it generates. Tracking them together is the basis of any campaign performance analysis.
No single figure tells the whole story of marketing campaign performance. Reach metrics show whether the right people saw an ad, efficiency metrics show what each result cost and revenue metrics show whether the spend paid back.
With performance being the criteria for success, performance marketing professionals are constantly analysing copious amounts of data from various sources to optimise ad campaigns in real-time. Several performance-related metrics can be monitored and tracked using digital analytics. This will help marketing teams precisely interpret a campaign’s performance and make appropriate changes to deliver the best possible impact. Let’s take a closer look at ten key metrics that marketers must deploy. You can also listen to the podcast version of this article.
Impressions
This is one of the most basic metrics to track ad campaign performance, capturing data on how often a particular ad has run on a website or an app. This metric also captures the number of times a campaign appears in search results, or when the ad banner is displayed on any of the network sites. Due to an increased share of bot-generated internet traffic, impressions data may not be an accurate indicator of ad reach in today’s times. But when integrated with the data of a third-party ad verification service, a clearer picture emerges of the number of times potential customers saw the ad.
Clicks
This performance marketing metric measures the number of times users interacted with a particular ad and followed the CTA (call-to-action) link. The higher the number of clicks, the more people are engaging with your ad and are interested in finding out more about the product or service. Cross-referencing click data with website analytics insights on the number of website visits can be revealing of any system failure or technical glitch that could have prevented the user from landing on the website. We recommend agreeing an acceptable gap between the two figures with your analytics team and investigating anything beyond it.
Clickthrough rate (CTR)
The CTR adds meaning to impressions and clicks metrics, and is calculated as the total number of clicks divided by the number of impressions. This metric indicates ad efficiency and is highly instrumental in fine-tuning marketing campaigns. CTR data highlights both high-performing ads and campaigns that could benefit from an increased budget and the underperforming ones that are a drain on resources. Proper analysis of CTR data helps marketing teams optimise ad spending by focusing on effective campaigns and reducing the budget on underperforming ones.
Cost
Marketing budgets are limited, which is why it is important to consistently monitor ad spend. A data integration solution helps consolidate ad spending from various platforms and campaigns on the performance marketing dashboard. This gives marketers clear insights into spending dynamics and helps with informed budgeting decisions.
Average cost per click (CPC)
This performance marketing metric provides marketers with insights into the profitability of various promotions and ad campaigns. Average CPC is calculated as the total cost of the clicks on an ad, divided by the total number of clicks on the ad. Average CPC can vary depending on the industry, location, and several other factors. The idea is to keep the average CPC as low as possible without compromising on campaign quality, which could negatively affect impressions and clicks, and positions on Google search.
Cost per mille (CPM)
Mille is French for one thousand, and the CPM metric is also referred to as cost per thousand. It indicates the price of one thousand ad impressions. This KPI is more relevant to branding and awareness campaigns than it is to acquisition and direct conversion campaigns, where CPC values are more relevant. As mentioned above, impression data isn’t always accurate due to large amounts of automated internet traffic. A critical measure of impressions is also the Ad-Viewability factor - which determines if the entire ad was loaded and actually viewed or not. Ad platforms use various methods to estimate how often a person views an ad to arrive at the viewable CPM (vCPM) metric.
Conversions
The conversions metric takes things a step beyond the clicks and CTR KPIs. A conversion requires users who have read the ad, clicked on the CTA, and arrived at the business’ website to complete a specific action. This could include creating an account, signing up for a newsletter, contacting the business, or completing a purchase online.
Conversion rate
Conversion rate is the share of clicks that lead to a conversion, calculated as conversions divided by clicks, multiplied by 100. It connects the click metrics above to the business outcome: a campaign with a strong CTR but a weak conversion rate is attracting interest it cannot convert, which usually points to the landing page, the offer or the audience targeting rather than the ad itself.
Cost per conversion (CPA) / cost per lead (CPL)
This KPI is the total ad spend on a particular campaign, divided by the number of conversions generated by the campaign. This metric indicates which marketing campaigns are providing the best ROI on the marketing budget. Cost per conversion data can help marketing teams fine-tune and optimise various elements of an ad campaign, leading to a positive response from users.
Return on ad spend (ROAS)
ROAS measures the revenue a campaign generates for every unit of currency spent on ads, calculated as revenue from ads divided by ad spend. A ROAS of 4:1 means the campaign returned four in revenue for every one spent. It is the clearest single view of whether paid media is paying back, but it works best when read alongside other campaign performance metrics:
- It measures revenue, not profit, so a high ROAS can still lose money on low-margin products.
- It depends on the attribution model, and last-click attribution tends to overstate retargeting and branded search.
- It reflects the first purchase only, so businesses with repeat customers should also track customer lifetime value (CLV).
- Lead generation campaigns often have no revenue at the point of conversion, so cost per lead and pipeline value are better guides there.
Tracking these metrics together, rather than one at a time, gives a complete picture of marketing campaign performance, from whether an ad was seen to whether it paid back. Infosys BPM’s marketing operations services support this with campaign execution, CRM and CMS operations, and data flows that connect lead scoring and attribution, so campaign performance metrics reach decision-makers in a form they can act on.
Frequently asked questions
Which metric best indicates campaign effectiveness?
It depends on the campaign's objective. For awareness campaigns, viewable impressions and cost per mille show whether the ad reached enough of the right people at a sensible price. For acquisition campaigns, conversion rate and cost per conversion matter most, and for campaigns that sell directly online, return on ad spend is the clearest single measure. Agreeing on one primary metric per campaign before launch keeps the evaluation honest.
How often should you review campaign performance data?
Spend and delivery are worth checking daily so budget or tracking problems are caught early. Click, cost and conversion trends are best reviewed weekly, once there is enough data to separate a real shift from normal day-to-day noise. Decisions based on return on ad spend or cost per acquisition work better monthly or at the end of each campaign flight, after late conversions have been attributed.
What should a campaign performance report include?
A useful report starts with the campaign objective and the primary metric it is judged on, then shows spend against budget, the core metrics against their targets and a breakdown by channel or audience. It should close with what changed since the last report and the actions planned in response, so the report drives decisions rather than simply recording numbers.
What is a good ROAS for a campaign?
There is no universal figure, because a good return on ad spend depends on profit margin. A simple starting point is the break-even ROAS, calculated as 1 divided by the gross margin. A product with a 40% margin, for example, breaks even at a ROAS of 2.5, so anything above that level adds profit and anything below it loses money on each sale.
This article was first published on Business Insider
